ZTO Express (Cayman) Inc (ZTO) 2022 Q2 法說會逐字稿

Good day, and welcome to the ZTO Express Second Quarter Financial Results 2022 Conference Call. (Operator Instructions) Please note, this event is being recorded.

美好的一天，歡迎參加中通快遞 2022 年第二季度財務業績電話會議。 （操作員說明）請注意，此事件正在記錄中。

I would now like to turn the conference over to Sophie Li. Please go ahead.

我現在想把會議交給 Sophie Li。請繼續。

Thank you, operator. Hello, everyone, and thank you for joining us today. The company's results and the Investor Relations presentation were released earlier today and are available on the company's IR website at ir.zto.com. On the call today from ZTO are Mr. Meisong Lai, Chairman and Chief Executive Officer; and Ms. Huiping Yan, Chief Financial Officer. Mr. Lai will give a brief overview of the company's business operations and highlights followed by Ms. Yan, who will go through the financials and guidance. They will both be available to answer your questions during the Q&A session that follows.

謝謝你，接線員。大家好，感謝您今天加入我們。該公司的業績和投資者關係報告於今天早些時候發布，可在公司的投資者關係網站 ir.zto.com 上查閱。中通今天接電話的是董事長兼首席執行官賴梅松先生；和首席財務官閆慧萍女士。賴先生將簡要介紹公司的業務運營和亮點，隨後閆女士將介紹財務和指導。在隨後的問答環節中，他們都可以回答您的問題。

I remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties and factors is included in the company's filing with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of the new information, future events or otherwise, except as required under law.

我提醒您，本次電話會議可能包含根據 1995 年《私人證券訴訟改革法案》的安全港條款作出的前瞻性陳述。此類陳述基於管理層當前的預期以及當前的市場和經營狀況，並與涉及已知或未知的風險、不確定性和其他因素，所有這些都難以預測，其中許多超出了公司的控制範圍，可能導致公司的實際結果、業績或成就與前瞻性陳述中的存在重大差異。有關此風險和其他風險、不確定性和因素的更多信息包含在公司向美國證券交易委員會提交的文件中。除非法律要求，否則公司不承擔因新信息、未來事件或其他原因更新任何前瞻性陳述的義務。

It is now my pleasure to introduce Mr. Meisong Lai. Mr. Lai will read through his prepared remarks in their entirety in Chinese before I translate for him in English. (foreign language)

現在很高興介紹賴美松先生。在我為他翻譯英文之前，賴先生將用中文完整地閱讀他準備好的發言。 （外語）

(foreign language)

（外語）

[Interpreted] Hello, everyone, and thank you for joining us today.

[翻譯]大家好，感謝大家今天加入我們。

In the second quarter of 2022, we still delivered a parcel volume of 6.2 billion, which increased by 7.5%, expanding our market share by 2 percentage points to 23%. The adjusted net income grew 38.2% to CNY 1.76 billion. Despite pandemic impact and weaker economic outcome, ZTO delivered strong performances in both market share and profits.

2022年第二季度，我們的包裹量仍為62億件，同比增長7.5%，市場份額擴大2個百分點至23%。調整後淨利潤增長38.2%至17.6億元人民幣。儘管受到大流行的影響和疲軟的經濟結果，中通在市場份額和利潤方面都取得了強勁的表現。

While we strictly implemented prevention in a couple of measures, we actively responded to the nation's call of stabilizing and growing the economy without compromising safety. Being among the first to resume operations, we proactively adapted our strategies to seize market opportunities. Through a balanced approach to parcel volume growth and profit expansion, we are actively advancing our long-term strategy.

我們在嚴格落實多項措施的同時，積極響應國家“穩增長、穩經濟”的號召。作為第一批復工復產的企業，我們積極調整戰略，搶占市場先機。通過平衡包裹量增長和利潤擴張的方法，我們正在積極推進我們的長期戰略。

Firstly, we continue to focus on expanding our market share through comprehensive means. First, taking advantage of early resumption of operations, we restored uninterrupted parcel volume in COVID-affected regions and enhanced our brand resonation and reputation with improved customer stickiness.

一是繼續著力通過綜合手段擴大市場份額。一是利用提前恢復運營的優勢，恢復受疫情影響地區的不間斷包裹量，提升品牌共鳴度和美譽度，提升客戶粘性。

Second, we leveraged insights from in-depth analysis provided by our digital platform to discover execution flaws that underpin the low or negative growth problems. We reexamined the cost composition against the effectiveness of pricing structure to stimulate incremental volume.

其次，我們利用數字平台提供的深入分析得出的見解來發現導致低增長或負增長問題的執行缺陷。我們根據定價結構的有效性重新檢查了成本構成以刺激增量。

Third, we aligned the resources towards varied demands from supermarkets to establish new business. For example, we increased our build-out of [2 stores] to serve customers with our time-definite product offerings and enhanced our fulfillment capabilities in specialized products and services. At the same time, we improved profitability by implementing process management measures.

三是針對超市的不同需求進行資源整合，開拓新業務。例如，我們增加了 [2 家商店] 的擴建，以便為客戶提供有時間限制的產品，並增強我們在專業產品和服務方面的履行能力。同時，我們通過實施流程管理措施提高了盈利能力。

First, we conducted thorough reviews of KA customer accounts and eliminated unjustifiable loss-making contracts in accordance with the principles of granting fair and transparent policies for network partners and outlets.

一是按照對網絡合作夥伴和網點給予公平、透明政策的原則，對KA客戶賬戶進行全面審核，剔除不合理的虧損合同。

Second, we further enhanced our real-time data monitoring and analytics of cost enterprising for sorting centers and line-haul routes. This allowed us to optimize route and shift planning in a timely manner, which improves resource allocations around automation and transportation equipment as well as human resources.

二是進一步加強對分揀中心和乾線航線成本企業的實時數據監控和分析。這使我們能夠及時優化路線和班次計劃，從而改善圍繞自動化和運輸設備以及人力資源的資源分配。

Third, we furthered implementation of standardization in operating procedures across all sorting centers. Through clearer definition of job responsibilities and the standardized operating protocols, we were able to better align compensation and incentives to drive labor productivity.

三是推進各分揀中心作業流程標準化。通過更明確的工作職責定義和標準化的運營協議，我們能夠更好地協調薪酬和激勵措施，以提高勞動生產率。

Fourth, we continued our efforts to delayer our network by reducing the number of stops a parcel makes as it flowed from end to end. Helping others to process parcel aggregation or enabling destination segregation at earlier stages of sortation are examples to achieve improved capacity utilization and cost efficiency across our entire network.

第四，我們繼續努力通過減少包裹在端到端流動時的停靠次數來延遲我們的網絡。幫助其他人處理包裹聚合或在分揀的早期階段實現目的地隔離是提高整個網絡的容量利用率和成本效率的例子。

Stepping into the second half of the year, while we insist on production safety, we will continue to focus on high-quality growth to widen competitive lead, to strengthen differentiated capabilities and implement the following work priorities. First, continue to improve the efficiency of our transit platform. We will standardize every step with digitalization that allows tracking, measuring and evaluation in order to improve the utilization of resources.

進入下半年，我們將在堅持安全生產的同時，繼續聚焦高質量增長，擴大競爭優勢，增強差異化能力，落實好以下工作重點。一是持續提升中轉平台效率。我們將通過數字化標準化每個步驟，實現跟踪、測量和評估，以提高資源利用率。

Second, further implement partner network management. We must ensure that couriers have access to full market pricing associated with incremental volume so that they are incentivized to acquire new customers. We can assist our network partners to install capacity that meets on-site demand. We can lend our capacity to help network partners and share their workload and enhance the ability to sort for final instead of interim destination.

二是進一步實施合作夥伴網絡管理。我們必須確保快遞員能夠獲得與增量數量相關的完整市場定價，從而激勵他們獲得新客戶。我們可以協助我們的網絡合作夥伴安裝滿足現場需求的容量。我們可以藉出我們的能力來幫助網絡合作夥伴並分擔他們的工作量，並增強為最終目的地而不是臨時目的地進行分類的能力。

Third, accelerate the development of last-mile presence and consolidate last-mile resources to further reduce pickup and delivery costs. We will continue to improve our service quality that meets diversified and personalized customer demand and improve customer loyalty.

三是加快發展最後一公里業務，整合最後一公里資源，進一步降低取件和派送成本。我們將不斷提升服務質量，滿足多元化、個性化的客戶需求，提升客戶忠誠度。

Fourth, further refine KPIs and improve rewards and recommend mechanisms for quality of services. We will tackle root causes of service quality issues all throughout the stages of pickup, sortation, transportation and delivery, aiming to improve timeliness and minimizing problems, including parcel damages.

四是進一步細化KPI，完善服務質量獎勵和推薦機制。我們將在取件、分揀、運輸、派送等各個環節，從根本上解決服務質量問題，提高時效性，盡量減少包裹損壞等問題。

Fifth, strengthen human capital development by talent attracting, retaining and faster track promotion for a wide range of functions or positions. We will ensure our talent reserves are sufficient to support our business development. We will further emphasize performance evaluation of our provincial general managers and sorting center managers under a lower-risk ranking elimination footwork.

第五，通過廣泛的職能或崗位的人才吸引、留住和更快的軌道晉升，加強人力資本開發。我們將確保我們的人才儲備足以支持我們的業務發展。進一步加強對省級總經理和分揀中心經理的績效考核，降低風險排位。

Sixth, continue to expand the businesses in 5 key logistics segments within our ecosystem, namely LTL, cloud warehousing, international, cold chain and [2T]. Supported by financing and commerce, we aim to develop cross-selling information technology integration and sharing of managerial know-how. We aim to establish stand-alone competitive advantage by each of the segments while cultivating logistics advantage that are built around comprehensive logistics service capabilities.

六是繼續拓展生態內5個重點物流板塊的業務，即零擔、雲倉儲、國際、冷鍊和[2T]。以金融和商業為支撐，發展交叉銷售信息技術集成和管理知識共享。我們的目標是建立各個細分市場的獨立競爭優勢，同時培育以綜合物流服務能力為核心的物流優勢。

Even though the short-term outlook is filled with uncertainties due to pandemic and other external factors, we believe that in the mid to long term, the logistics industry is resilient and has great market potential. We believe that longer-term positive prospects and room for upside are still in place.

儘管受疫情等外部因素影響，短期前景充滿不確定性，但我們認為，中長期來看，物流行業具有韌性，市場潛力巨大。我們認為長期的積極前景和上行空間仍然存在。

ZTO's consistent strategy is to achieve continuous market share expansion and profit targets while maintaining high quality of service and customer satisfaction. Our track record has proven our competitiveness in terms of strategic direction and execution. For example, fairly and transparently aligning interest among our network partners, simultaneously attaining growth in parcel volume and profit, continuous iteration of technology and information systems and its application and strengthening our diversified logistics ecosystem in an orderly manner.

中通的一貫戰略是在保持高質量服務和客戶滿意度的同時實現持續的市場份額擴張和利潤目標。我們的業績記錄證明了我們在戰略方向和執行方面的競爭力。例如，公平透明地調整我們網絡合作夥伴之間的利益，同時實現包裹數量和利潤的增長，技術和信息系統及其應用的不斷迭代，有序地加強我們多元化的物流生態系統。

Looking ahead, we're focused on our mission with a strong sense of urgency. We will be left behind if we don't progress. We will be the best we can. This moment has opportunities. Support and cover of our network partners and accelerate the widening of our competitive [edge].

展望未來，我們以強烈的緊迫感專注於我們的使命。如果我們不進步，我們就會落後。我們將盡我們所能。這一刻有機會。支持和覆蓋我們的網絡合作夥伴，加速擴大我們的競爭 [優勢]。

Now let's have Ms. Yan to take us through the financials.

現在讓閆女士帶我們了解財務狀況。

(foreign language) Hello to everyone on the call. As I go through our financials, please note that unless specifically mentioned, our numbers quoted are in RMB, including changes referring to year-over-year comparisons. Detailed analysis of our financial performance, unit economics and cash flow are posted on our website, and I'll go through some of the highlights here.

（外語）大家好。在我瀏覽我們的財務數據時，請注意，除非特別提及，否則我們引用的數字均以人民幣為單位，包括與去年同期比較相關的變化。我們的財務業績、單位經濟和現金流的詳細分析已發佈在我們的網站上，我將在這裡介紹一些亮點。

In the second quarter, despite the headwind caused by COVID outbreak, ZTO delivered solid growth results. Parcel volume increased 7.5% to 6.2 billion, advancing the quarterly market share by 2 points to 23%. The adjusted net income grew 38.2% to CNY 1.76 billion. Total revenue increased 18.2% to CNY 8.7 billion. ASP for the core express delivery business increased 10.5% or CNY 0.13. Normalized competitive environment supported and helped maintain second half 2021 price increases. In addition, our internal efforts to optimize customer base is also generating -- hello?

第二季度，儘管受新冠肺炎疫情影響，中通仍實現穩健增長。包裹量增長 7.5% 至 62 億件，季度市場份額提升 2 個百分點至 23%。調整後淨利潤增長38.2%至17.6億元人民幣。總收入增長 18.2% 至 87 億元人民幣。核心快遞業務的平均售價上漲 10.5% 或人民幣 0.13 元。正常化的競爭環境支持並幫助維持了 2021 年下半年的價格上漲。此外，我們優化客戶群的內部努力也在產生——你好？

Operator, can you check if everybody is found -- is okay?

接線員，你能檢查一下是否找到了所有人——好嗎？

Yes, you may proceed.

是的，你可以繼續。

Thank you. I'll just repeat the last sentence. In addition, our internal effort to optimize customer base is also generating meaningful results. Total cost of revenue was CNY 6.5 billion, which increased 14.2%. Overall unit cost of revenue for the core express delivery business increased 6.2% or CNY 0.06.

謝謝你。我只重複最後一句話。此外，我們優化客戶群的內部努力也產生了有意義的結果。總收入成本65億元，增長14.2%。核心快遞業務的整體單位收入成本增加 6.2% 或 0.06 元。

More specifically, line-haul transportation costs per parcel increased 2% to CNY 0.49 as a combined result of surging fuel cost and lower-than-expected volume offset by cost productivity gain through usage of higher-capacity trailer trucks, improved load rate and better route planning. We estimated the negative impact from fuel cost hike was CNY 0.04 per parcel for the quarter. Unit sorting costs increased 9.1% to CNY 0.30, driven by increased labor salary and higher depreciation and amortization costs associated with a higher installed base of automation equipment.

更具體地說，由於燃料成本飆升和低於預期的運輸量被通過使用更大容量的拖車、提高裝載率和更好的運輸成本而獲得的成本生產力所抵消，每個包裹的長途運輸成本增加了 2% 至 0.49 元路線規劃。我們估計本季度燃料成本上漲的負面影響為每包 0.04 元人民幣。單位分揀成本增加 9.1% 至 0.30 元，原因是人工工資增加以及與自動化設備安裝基數增加相關的折舊和攤銷成本增加。

Gross profit increased 31.6% to CNY 2.2 billion given increased volume and ASP against still relatively stable cost structure. Gross profit margin rate increased 2.6 points to 25.4%. SG&A expense as a percentage of revenue dropped 0.1 points to 5.3%, demonstrating a lean corporate cost structure. Income from operations increased 36.4% to CNY 2 billion, and associated margin grew 3.1 points to 22.9%. Operating cash flow grew 95.7% to CNY 3.8 billion. Capital expenditure totaled CNY 1.5 billion.

毛利增長 31.6%至人民幣 22 億元，因銷量和平均售價增加，而成本結構仍相對穩定。毛利率上升 2.6 個百分點至 25.4%。 SG&A 費用佔收入的百分比下降 0.1 個百分點至 5.3%，顯示出精益的企業成本結構。經營收入增長 36.4% 至 20 億元人民幣，相關利潤率增長 3.1 個百分點至 22.9%。經營現金流增長 95.7% 至 38 億元人民幣。資本支出總額為15億元人民幣。

Being an increasingly integral part of the economic revitalization and daily livelihood, the express delivery industry has shown strong resilience throughout lockdowns and facing economic uncertainties. We believe that the industry's long-term growth potential and value prospects remain strong. By enhancing core capabilities, calibrating revenue mix and refining cost management, ZTO continues its consistent strategies to achieve sustainable, high-quality growth. Furthermore, with continued efforts on developing integrated logistics ecosystem, we aim at providing comprehensive logistics services to meet diversified and tailored demand, forging synergy and enhancing our leading position.

作為經濟振興和民生日益重要的組成部分，快遞行業在整個封城和麵臨經濟不確定性的過程中表現出強大的韌性。我們認為行業的長期增長潛力和價值前景依然強勁。通過提升核心能力、調整收入結構和優化成本管理，中通繼續執行其一貫的戰略，以實現可持續的高質量增長。此外，我們將繼續致力於發展綜合物流生態系統，提供綜合物流服務，滿足多元化和量身定制的需求，形成協同效應，提升我們的領先地位。

Based on current market and operating conditions, the company maintains its previously stated annual volume guidance, which is in the range of 24.96 billion to 25.86 billion, representing a 12% to 16% increase year-over-year. These percentage increase estimates, meaningfully above anticipated industry average, reflect company's commitment to further our growth strategy and confidence in our ability to deliver despite macro uncertainties that still exist in the marketplace. These estimates represent management's current and preliminary view, which are subject to change.

根據目前的市場和經營狀況，公司維持此前公佈的年度銷量指導，即在 249.6 億至 258.6 億之間，同比增長 12% 至 16%。儘管市場上仍然存在宏觀不確定性，但這些百分比增長估計顯著高於預期的行業平均水平，反映了公司對推進我們的增長戰略的承諾以及對我們交付能力的信心。這些估計代表管理層的當前和初步觀點，可能會發生變化。

This concludes our prepared remarks. Operator, please open the call for questions. Thank you.

我們準備好的評論到此結束。接線員，請打開電話提問。謝謝你。

(Operator Instructions) Our first question comes from Lu Xu with Citi.

（操作員說明）我們的第一個問題來自花旗的陸旭。

(foreign language) Now let me translate my question. My first question is regarding the service operation in Yiwu. According to the latest local COVID measures that was announced last night, you lifted the closed-off management in some regions. It also mentioned that the logistics, the e-commerce and the enterprises shall resume operations in an orderly manner. Could the management kindly share more color on the implementation details? For example, to start with, what region, whether it requires access pass, how should we anticipate the overall recovery pace? And when would the parcel volume return back to normal? And what was the parcel volume impact during the prior 7-day service suspension period in Yiwu?

（外語）現在讓我翻譯我的問題。我的第一個問題是關於義烏的服務運營。根據昨晚公佈的當地最新疫情措施，你們解除了部分地區的封閉管理。還提到，物流、電子商務和企業要有序恢復經營。管理層能否就實施細節分享更多色彩？例如，從哪個地區開始，是否需要通行證，我們應該如何預測整體恢復速度？包裹量何時會恢復正常？在義烏之前的 7 天服務暫停期間，包裹量有什麼影響？

And my second question is regarding the ASP trend. So the whole industry overall, ASP were relatively stable this year even during this low season. And aside from previously mentioned some internal customer base optimization, and what do you think are some like external factors behind that such as policy, high fuel price, the COVID resurgence or some other factors? And going forward, how do we foresee the ASP trend in the third and fourth quarter or even in longer period? And do you see any short-term price pressure from the recent domestic fuel price jump and the service resumption in Yiwu? And meanwhile, some of our peers slightly increased the ASP in Yiwu at end of July, and [we think then] what was the logic behind that and whether we would follow their steps going further.

我的第二個問題是關於 ASP 趨勢的。所以整個行業整體來說，今年的平均售價即使在這個淡季也相對穩定。除了前面提到的一些內部客戶群優化之外，您認為背後有哪些外部因素，例如政策、高油價、COVID 復甦或其他一些因素？展望未來，我們如何預測第三季度和第四季度甚至更長時期的 ASP 趨勢？近期國內燃油價格上漲和義烏恢復服務，您是否看到短期價格壓力？與此同時，我們的一些同行在 7 月底略微提高了義烏的 ASP，[我們當時認為] 這背後的邏輯是什麼，我們是否會按照他們的步驟走得更遠。

(foreign language)

（外語）

[Interpreted] Thank you for your question. First of all, relating to Yiwu, indeed, started the 11th of this month, there are lockdowns. And it's gradually resuming. However, for express delivery businesses, we need to stay coordinated with the government's inspection because it is a concerted effort across all industry as well as logistics. Some of our outlets have already started picking up packages. So it's a good indication that things will return to normal. Yiwu represents about 10% of our total volume. So it's about 6 million to 7 million packages a day.

[解釋] 謝謝你的提問。首先，關於義烏，確實從本月11號開始，有封城。並且正在逐漸恢復。但是對於快遞業務，我們需要配合政府的檢查，因為這是全行業和物流的共同努力。我們的一些網點已經開始收取包裹。因此，這是一個很好的跡象，表明事情將恢復正常。義烏約占我們總銷量的 10%。所以每天大約有 600 萬到 700 萬個包裹。

Now the question regarding pricing. ZTO has always had a level of premium against all the other Tongda pricing. So we think that it has something to do with the recent price increases. And our price is already slightly higher, so we are not preparing or anticipating any changes at this moment.

現在是關於定價的問題。中通在所有其他通達定價中始終具有一定的溢價水平。所以我們認為這與最近的價格上漲有關。而且我們的價格已經略高，所以我們目前不准備或預期任何變化。

Second half of the year, we think that the overall theme is stabilizing for the pricing. Typically, in the industry, there is a normal variation from month to month. For example, from September -- from August to September, there is about 6 to 7 points increase, and then from September to October and so on and so forth all the way through November. There's increase in volume demand, and it's associated also with the price gradual increase. So overall, for the second half of the year, we think the price will go up slightly for the fourth quarter -- third to fourth quarter. We'll hike up about 20 points or so. So it's stabilizing increases.

下半年，我們認為總體主題是價格趨穩。通常，在行業中，每個月都有正常的變化。例如，從 9 月——從 8 月到 9 月，大約增加 6 到 7 個點，然後從 9 月到 10 月等等，一直到 11 月。需求量的增加，也伴隨著價格的逐步上漲。因此，總體而言，對於下半年，我們認為第四季度（第三至第四季度）價格將略有上漲。我們將上漲大約 20 點左右。所以它正在穩定增長。

And if I may supplement to the longer term, the industry is with significant growth potential because it is indeed part of the day-to-day life with varied channels of e-commerce development, for example, video streaming and all that. So we think that the overall pricing will continue to stabilize And being such a low starting point for express delivery because it's associated largely with e-commerce costs being the largest concern, going forward, we think the upper increases is very much likely.

如果我可以從長遠來看，該行業具有巨大的增長潛力，因為它確實是日常生活的一部分，擁有各種電子商務發展渠道，例如視頻流等。所以我們認為整體定價會繼續穩定，而且作為一個如此低的快遞起點，因為它在很大程度上與電子商務成本是最大的擔憂有關，未來我們認為上限上漲的可能性很大。

Our next question comes from Tian Hou with TH Capital.

我們的下一個問題來自天侯與泰合資本。

(foreign language) The first one is I saw the margin in second quarter was really good, much better than all the quarters in the last year. So earlier this year, management did give the guidance for the full year profit. So I would like to hear more about the margin trends for the second half of 2022. That's number one.

（外語）第一個是我看到第二季度的利潤率非常好，比去年所有季度都要好。所以今年早些時候，管理層確實給出了全年利潤的指導。因此，我想更多地了解 2022 年下半年的利潤率趨勢。這是第一位的。

Number two is among all the parcels, what's the portion from e-commerce? And as we grow into new business, so maybe e-commerce portion is going to be less than before? And then also for the -- among e-commerce, how -- what's the portion of -- from the new platform such like TikTok? Okay. That's all my questions.

第二是在所有包裹中，電子商務的份額是多少？隨著我們進入新業務，電子商務部分可能會比以前少嗎？然後還有 - 在電子商務中，來自 TikTok 等新平台的份額是多少？好的。這就是我所有的問題。

Thank you, Tian, for the question. Let me try to answer the questions. First question relating to the margin, what are the good reasons for the margin increase? As we stated earlier, the price for -- first of all, we are able to sustain the price that was increased from the past 1.5 years. And because of the competitive environment, it's stabilizing. And for the second half of the year, we think because the price hike was started in second half of last year, so the relative ASP increases will be tapering off. And that leads to the comment on profit. Profit, second half of the year relative to the first half of the year, the pace of expansion will be slower, certainly, because of the base [ASP].

謝謝田先生的提問。讓我試著回答這些問題。第一個關於保證金的問題，保證金增加的充分理由是什麼？正如我們之前所說，首先，我們能夠維持過去 1.5 年以來上漲的價格。而且由於競爭環境，它正在穩定下來。而對於下半年，我們認為由於價格上漲是從去年下半年開始的，因此相對平均售價的增長將逐漸減弱。這導致了對利潤的評論。利潤，下半年相對上半年，擴張速度會慢一些，當然是因為基數[ASP]。

And then if I may comment a little bit more on the qualification of -- behind your question, although I don't think I can give you the specific numbers, the revenue increase is driven by ASP, we've explained. But I think most importantly is what we are doing on the cost side. The cost side of initiatives are including addressing specific loss-making transactions, improving our mix and advancing our volume so that we could utilize all our improved utilization of our capacity.

然後，如果我可以就你的問題的資格發表更多評論，雖然我認為我不能給你具體的數字，但收入增長是由 ASP 驅動的，我們已經解釋過。但我認為最重要的是我們在成本方面所做的事情。舉措的成本方麵包括解決特定的虧損交易、改善我們的組合和提高我們的數量，以便我們可以利用我們所有提高的產能利用率。

So all these are intact and in place. And with the labor cost increases, we have automation. We have better route planning so that the transportation cost will also be reduced. And I think if you recall, we had addressed the overall cost productivity gain. It really is associated with our total sort of delayering or shortening the distance from package flow -- for package flow. So in other words, reducing the number of sortation for a particular package as it goes through all the stages of the transit. So these are structural improvements that will give us longer-term price productivity gain. And third quarter, fourth quarter, the businesses so far, what we have observed is still relatively stable. So that answers your first part of the question.

所以所有這些都完好無損。隨著勞動力成本的增加，我們有了自動化。我們有更好的路線規劃，這樣運輸成本也會降低。而且我認為，如果您還記得的話，我們已經解決了總體成本生產率的提高問題。它確實與我們總的延遲或縮短與包裹流的距離有關——對於包裹流。換句話說，減少特定包裹在運輸的所有階段的分揀次數。因此，這些都是結構性的改進，將給我們帶來長期的價格生產力收益。而三季度、四季度的業務，到目前為止，我們觀察到的還是比較穩定的。所以這回答了你問題的第一部分。

Second part, relating to the e-commerce as a proportion of our total business. It has been stable. And us, ZTO, being the largest player in the express delivery industry, we have maintained a high level of market presence. And that applies the same to existing traditional or newcomers into the e-commerce space. So our proportion is consistent with our total market presence.

第二部分，關於電子商務占我們總業務的比例。它一直很穩定。而我們中通作為快遞行業最大的參與者，一直保持著較高的市場佔有率。這同樣適用於電子商務領域的現有傳統或新進入者。所以我們的比例與我們的總市場佔有率是一致的。

Our next question comes from Qianlei Fan with Morgan Stanley.

我們的下一個問題來自摩根士丹利的範倩蕾。

(foreign language) So I'll translate for myself. I have 2 questions. The first question is about CapEx and daily capacity. So considering a slowdown in industry volume growth, do you have any adjustment or new guidance on the full year CapEx? And also, what's the daily handling capacity by the end of the year?

（外語）所以我自己翻譯。我有 2 個問題。第一個問題是關於資本支出和每日產能。那麼考慮到行業數量增長放緩，您對全年資本支出是否有任何調整或新的指導？還有，年底的日處理能力是多少？

And my second question is about the cost. So we have seen that if we exclude the impact from inflation actually in the second quarter, unit cost optimization has continued. So wondering, is there any guidance on cost efficiency improvement in the second half of the year?

我的第二個問題是關於成本的。所以我們已經看到，如果我們實際上在第二季度排除通脹的影響，單位成本優化仍在繼續。所以想問一下，下半年有沒有關於成本效率提升的指引？

So let me answer the question for the CapEx. Indeed, the -- our goal and target for growth is significantly above the industry average. And because we -- it's reflected in our strategy, we believe that growing volume, growing our market share is crucial for -- considering the nature of our business, right? It's a scale-driven business. So our CapEx spending, although with that said, is very much managed against the demand and what we have anticipated the overall growth, we don't want to overinvest ahead of the time too much, but -- yet we don't want to stay behind because we are, with our focus, growing our volume.

所以讓我回答資本支出的問題。事實上，我們的增長目標和目標明顯高於行業平均水平。而且因為我們 - 這反映在我們的戰略中，我們相信增加銷量，增加我們的市場份額對於 - 考慮到我們業務的性質，對吧？這是一個規模驅動的業務。因此，儘管如此，我們的資本支出支出在很大程度上是根據需求和我們對整體增長的預期進行管理的，我們不想提前過度投資太多，但是——但我們不想留在後面，因為我們專注於增加我們的銷量。

So the current CapEx goal is still kept somewhere around CNY 9 billion. We're not going to exceed that. And then I think the likelihood is probably somewhere around CNY 6 billion to CNY 7 billion. But we want to make sure that we capture the market opportunities. So this range is pretty wide. However, it is going to be managed closely.

因此，目前的資本支出目標仍保持在 90 億元左右。我們不會超過這個。然後我認為可能性可能在 60 億元到 70 億元人民幣左右。但我們要確保我們抓住市場機會。所以這個範圍很廣。但是，它將被密切管理。

The second part of the question is, indeed, we have put in a lot of effort in addressing our cost productivity gain. With that, also considering the second half of the year, the seasonality, the volume changes, we think that the cost will continue to have leverage.

問題的第二部分是，事實上，我們已經付出了很多努力來解決我們的成本生產力提升問題。鑑於此，同時考慮到下半年的季節性、交易量的變化，我們認為成本將繼續具有槓桿作用。

(foreign language)

（外語）

So let me further translate for the Chairman. It is consistent to what I had just described.

所以讓我為主席進一步翻譯。這與我剛才描述的一致。

[Interpreted] Relative to the first half of the year because the volume is below our expectation, our scale leverage is not necessarily fully demonstrated. We indeed have significant capacity preparedness. And in the second half, as the volume for the whole industry, which is anticipated higher than first half, we think our scale leverage will further demonstrate and the cost per unit will decrease.

【解讀】相對於上半年，由於成交量低於我們的預期，我們的規模槓桿未必充分體現。我們確實有大量的能力準備。而下半年，由於整個行業的銷量預期高於上半年，我們認為我們的規模槓桿將進一步體現，單位成本將下降。

Our next question comes from Thomas Chong with Jefferies.

我們的下一個問題來自 Jefferies 的 Thomas Chong。

(foreign language) We have seen very impressive earnings in the second quarter. I just want to get some color about our investment strategies. How should we think about the investment in new initiatives going forward? And would that -- would we use some of our earnings to invest for the future?

（外語）我們在第二季度看到了非常可觀的收益。我只是想了解一下我們的投資策略。我們應該如何看待未來對新舉措的投資？那——我們會用我們的一些收益來投資未來嗎？

And my second question is about our market share. Given that we have increased our market share by 2 percentage points during the quarter, just want to get some color about our long-term target in terms of the market share gain story.

我的第二個問題是關於我們的市場份額。鑑於我們在本季度將市場份額提高了 2 個百分點，只是想從市場份額增長的故事中了解我們的長期目標。

Okay. Thank you for your question. The first question relating to our investment. I think I understand that you're referring to both our new products within our core businesses as well as the investment perhaps in our ecosystem. Now I will just answer to those 2 areas of investment strategy.

好的。謝謝你的問題。第一個問題與我們的投資有關。我想我理解您指的是我們核心業務中的新產品以及可能對我們生態系統的投資。現在我將回答投資策略的這兩個領域。

The first part, we think that to differentiate ourselves from the rest of the Tongda, we are and we have been investing in time and energy in developing differentiated products to allow consumers, our customers to have a different experience and also allowing them to meet -- to receive individualized services for their diversified needs. And our capability of fulfilling these commitments are requiring investments. So indeed, that is part of our strategy and plan, although the volume as of now is not significant. So we are carefully and we are prudent in investing on those parts of the new capabilities development.

第一部分，我們認為，為了讓自己與通達的其他人區分開來，我們一直在投入時間和精力開發差異化產品，讓消費者、我們的客戶有不同的體驗，也讓他們滿足—— - 為他們多樣化的需求提供個性化的服務。我們履行這些承諾的能力需要投資。因此，這確實是我們戰略和計劃的一部分，儘管目前的數量並不大。因此，我們謹慎且謹慎地投資於新能力開發的這些部分。

And the second part, to our ecosystem. The ecosystem, if you look back to our past, our approach has always been rather -- it's an extension of our existing capabilities and resources because our goal is to fully utilize or double and triple usage of our existing investment and existing resources. So the growth of our ecosystem is also very coordinated, and it has its own pace.

第二部分，我們的生態系統。生態系統，如果你回顧我們的過去，我們的方法一直是——它是我們現有能力和資源的延伸，因為我們的目標是充分利用或將現有投資和現有資源的兩倍和三倍利用。所以我們生態系統的成長也是非常協調的，有自己的節奏。

If you're referring to invest in new initiatives that could add to our existing capabilities or capabilities that are missing, then it refers to our normal M&A businesses. So yes, we will continue to look and we will continue to see based on the opportunities that are there for us to expand our comprehensive capabilities. And then we will look inward to say what do we have, what we don't have. So that's all part of the normal M&A, but we're not saying that we will be deviating from our traditional, our established way of investment discipline.

如果您指的是投資於可以增加我們現有能力或缺失能力的新計劃，那麼它指的是我們正常的併購業務。所以，是的，我們將繼續關注，我們將繼續關注我們擴大綜合能力的機會。然後我們會向內看，說出我們有什麼，我們沒有什麼。所以這都是正常併購的一部分，但我們並不是說我們會偏離我們傳統的、既定的投資紀律方式。

Market share, longer-term goal, as we had anticipated the overall potential in the industry, the growth prospects, we think that we are in a very good position to reach 30% or even 40% of the overall market in the next 5 to 10 years. Again, that's a very loose range. However, as we mentioned, it is a scaled business. Scale leverage is important. And as the demand is there, as the growth potential is there, we have the best competitive advantage. We are in the better -- most favorable position to achieve a higher market share, and that is indeed what we are trying to achieve. I hope that answers your question.

市場份額，長期目標，正如我們對行業整體潛力、增長前景的預期，我們認為我們處於非常有利的位置，在未來 5 至 5 年內達到整體市場的 30% 甚至 40% 10年。同樣，這是一個非常寬鬆的範圍。然而，正如我們所提到的，這是一項規模化的業務。規模槓桿很重要。隨著需求的存在，隨著增長潛力的存在，我們擁有最好的競爭優勢。我們處於更好的——最有利的位置來獲得更高的市場份額，這確實是我們正在努力實現的目標。我希望這能回答你的問題。

Our next question comes from Frank Yip with Daiwa Capital.

我們的下一個問題來自大和資本的 Frank Yip。

(foreign language) So 2 questions, first related to the more longer-term industry parcel volume and the ASP growth target. And the second one is related to the -- do we consider to do the dual primary listing on the HKEX.

（外語）所以2個問題，第一個與更長期的行業包裹量和ASP增長目標有關。第二個與我們是否考慮在香港交易所進行雙重主要上市有關。

(foreign language)

（外語）

Let me translate for Chairman the first question, in the next 2 to 3 years, the growth of the industry.

讓我為董事長翻譯第一個問題，未來2到3年，行業的增長。

[Interpreted] So we are -- we remain confident in the entire industry's longer-term growth because the potential is deep and the ability to expand is still very strong, particularly speaking the penetration into rural, agriculture as well as manufacturing opportunities are just starting to present itself. So we expect the industry will continue to grow, especially when you have this concentration in the top players continuing to increase. The scale and the leverage will further support and propel the growth of the -- the healthy growth of this industry.

[解讀]所以我們對整個行業的長期增長仍然充滿信心，因為潛力很深，擴展能力仍然很強，特別是對農村、農業和製造業的滲透剛剛開始呈現自己。因此，我們預計該行業將繼續增長，尤其是當您對頂級參與者的集中度持續增加時。規模和槓桿將進一步支撐和推動行業的健康成長。

The second part of the question relating to dual primary listing, including in the U.S., in Hong Kong. We have been researching, and I think the company has no hurdle. So therefore, it is an option for us to achieve such in due time.

問題的第二部分有關雙重主要上市，包括在美國，在香港。我們一直在研究，我認為公司沒有障礙。因此，我們可以選擇在適當的時候實現這一目標。

(foreign language)

（外語）

(foreign language)

（外語）

Let me translate.

讓我翻譯。

[Interpreted] Our overall view is that industry pricing will be stabilizing and slightly and gradually increase. It is permanent by its nature and the current development trend as the players -- as the market share becomes more and more concentrated. In other words, the pricing power will be there. We believe the pricing going higher and increasing is very much likely. It has a high probability of increasing.

【解讀】我們的總體看法是行業價格將企穩並小幅逐步上漲。就其性質和當前的發展趨勢而言，它是永久性的——隨著市場份額變得越來越集中。換句話說，定價權將在那裡。我們認為價格上漲和上漲的可能性很大。它增加的概率很高。

Our next question comes from Lin Chen with JPMorgan.

我們的下一個問題來自摩根大通的 Lin Chen。

(foreign language) I would like to have management to make a comment on the difference in the digitalization level with its peers, especially with its closest peers such as YTO or Yunda.

（外語）我想讓管理層就數字化水平與同行的差異發表評論，尤其是與圓通或韻達等最接近的同行。

(foreign language)

（外語）

[Interpreted] Relative to the other industry peers, technology has always been a core competency or a core focus of our business. We have invested consistently, and among the Tongda, we invest the largest amount. And also we are the most innovative. There are many applications of the technology uses are -- originated from ZTO. This year, we will continue to strive for this competitive advantages development. For example, the initiatives include, one, expanding our technology empowerment and extend that capability to our outlets, helping them carrying out more online and real-time management of their operations during their policymaking, financial analysis, are all done with digitized solutioning. So the -- and also it includes the end-of-the-line management capabilities, all the way extending to the couriers.

【解讀】相對於其他行業同行，技術一直是我們業務的核心競爭力或核心焦點。我們一直在投資，在通達中，我們投資的金額最大。我們也是最具創新性的。有很多應用的技術用途都是——起源於中通。今年，我們將繼續爭取這一競爭優勢的發展。例如，這些舉措包括：一是擴大我們的技術賦能，並將該能力擴展到我們的網點，幫助他們在決策過程中對其運營進行更多的在線和實時管理，財務分析都通過數字化解決方案完成。因此，它還包括終端管理功能，一直延伸到快遞員。

The second part, which is also a very effective initiative that is generating significant results for us, that is the -- what we call (foreign language), meaning we are focusing more on real time, more frequent, more in-time visibility to the data and -- so that we could find issues, find problems as soon as we can and resolve them as soon as we can. And this extends to all across -- it extends to -- across our operations, all the segments, including the sortation, the transportation, the route planning, the labor utilization, labor productivity and so on and so forth. And this will further our ability to gain productivity in all front. That is what we are -- I don't think we want to try to compare with all the other players because each has a different starting point and each has different resources and capabilities that is focused. They are doing well, and then some of them are what we are able to learn from, and some are that we are able to achieve better.

第二部分，這也是一個非常有效的舉措，為我們帶來了顯著的成果，即我們所說的（外語），這意味著我們更關注實時、更頻繁、更及時的可見性數據和——以便我們能夠發現問題，盡快發現問題並儘快解決問題。這延伸到整個——它延伸到——我們的運營，所有的環節，包括分揀、運輸、路線規劃、勞動力利用、勞動生產率等等。這將進一步提高我們在各個方面提高生產力的能力。這就是我們——我認為我們不想嘗試與所有其他參與者進行比較，因為每個參與者都有不同的起點，並且每個人都有不同的資源和專注的能力。他們做得很好，其中一些是我們能夠學習的，還有一些是我們能夠做得更好的。

This concludes our question-and-answer session. I would like to turn the conference back over to Mrs. Huiping Yan for any closing remarks.

我們的問答環節到此結束。我想把會議轉回給閆慧萍女士做閉幕詞。

Thank you again for joining us for the call, and we look forward to speaking with you further if you have any more questions.

再次感謝您加入我們的電話，如果您有任何問題，我們期待與您進一步交談。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[此成績單中標記為 [已翻譯] 的部分由現場通話中的口譯員朗讀。]